Do firms develop dynamic capabilities differently? The case of professional services firms in New Zealand

Abstract

Differences in dynamic capabilities (DCs) help explain firms’ abilities to change. DCs research has explored what DCs might be and generic categorisations of them after they have emerged, but little light has been thrown on the specific practices that enable or inhibit their emergence. This study explores how DCs emerge and why firms might develop DCs differently under the same market conditions.

This thesis sought to understand these questions and respond to calls for longitudinal empirical studies to extend DC theory by studying the paths of four professional services firms in New Zealand over three decades. Using a multi-case study design and thematic analysis, this research applied Teece’s (2007) framework of sensing, seizing and transforming capabilities to identify the presence of DCs within each case, before attempting to identify the enablers and inhibitors influencing the development of such capabilities. While elements of each generic class of DC were evident in each case, the findings suggest that in order to utilise DCs to adapt effectively to environmental changes, a firm must deploy all three classes of capabilities at the same time.

This research contributes to the DC literature by proposing a prioritised typology of antecedents that may help stimulate Teece’s sensing, seizing and transforming DCs, while identifying the rigidities that could inhibit their development. The empirical results reported on in this thesis suggest that similar firms’ development of DCs may be different because of idiosyncratic leadership and culture that can limit a firm’s ability to perceive the importance of DCs. Other characteristics that inhibit the development of DCs include centralised, non-participative cultures and high internal (or inward looking) orientation. These results extend current theory about triggers for developing DCs by identifying that the strongest triggers may be either serious macro-economic events or internally driven by firm-defined goals or strategies.